Tales of the unexpected – stories of procurement non-compliance

We wrote a while ago about how non-compliance should be the friend of the procurement professional. So thought I’d share some personal war stories around the issue.

We said in the last piece that lack of communication was probably the number one cause of non-compliance. I once asked a procurement manager whether he had preferred contracts in place for routine items. “Yes” he said. “Our budget holders should  be using our preferred suppliers and contracts”.

So how do you communicate that. I asked.

“Oh, we don’t actually tell them who the preferred suppliers are. The users are supposed to ring us up and ask us before they order anything”!

Does that happen, I wondered (and bear in mind this was a while ago - no clever, workflow based e-procurement system here)?

“Well, not very often, really...”

So communication is key, and that doesn’t mean just a note when the contract is first let. This is one area that technology has made so much easier with databases and catalogues that can be made make easily available to users.

Then we have the question of appropriateness. My team once spent months putting in place a framework contract  for training providers. We did consult users, and we had different “lots”,  but a year later, “compliance” to our contracts was less than 10% of total training spend. We just hadn’t met the needs  - the supply market in that area is so fluid, and user needs change constantly, so our whole strategy of a static framework just wasn’t appropriate. We didn’t fully understand the user needs before we developed our approach – our fault again.

A final example, illustrating the value for money point. In another role, I let a pan-European contract for car hire services with Hertz. I let all our offices around Europe know, and Hertz assured me that we were getting the best deal possible in every country. A few months later, I got some MI and saw that our Spanish offices weren’t using the deal. I contacted them, and they came back to me saying they had a much better deal locally, 20% cheaper than my pan-European pricing. They showed me the rates and they were astonishingly good value.

Who was this wonderful local supplier, I asked?

Hertz, they said.

So again, non-compliance was my friend  – once I’d got over my embarrassment and annoyance with Hertz! But it taught me that sometimes sales people (just like procurement) can’t get the buy-in of their local management. Hertz in Spain were understandably offering their best prices to a local customer with real, committed volume, rather than their own European accounts guy who brought some vague promise of business via a pan-European deal...

As we said in our last piece, non-compliance is always telling you something. Find out what it is, and use it to your advantage. And after all, the day you have zero non-compliance is the day the procurement job becomes very boring!

 

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